Chapter 9

Motivating the Channel Members

Objective 1: 9
Channel Management

Channel Management:

The administration of existing channels to secure the cooperation

of channel members in achieving the firm’s distribution objectives
 9
Motivation Management

Motivation Management:

The actions taken by the manufacturers to

foster channel member cooperation in
implementing the manufacturer’s
distribution objectives
Objective 2:
9
Channel Management versus
Channel Design

Channel Design Channel Management

“Setting up” “Running”

the channel the channel
Objective 3:
9
Motivating Channel Members

Basic Framework

1. Find out the needs and problems of channel members.

2. Offer support to the channel members that is consistent
with their needs and problems.
3. Provide leadership through the effective use of power.
Objective 4: 9
Channel Member
Needs & Problems

Approaches for learning about member

needs & problems:

• Research studies of channel members

• Research studies by outside parties
• Marketing channel audits
• Distributor advisory councils
 9
Research Studies of Channel Members

Less than 1 percent of manufacturers’ research

budgets is spent on channel member research!

BUT:

Manufacturer-initiated research can be useful

because certain types of needs or problems may not be at all obvious.
 9
Research Studies by Outside Parties

Why use outside parties to conduct research?

They provide a higher They provide a level

assurance of objectivity. of expertise that the
manufacturer may not
possess.
Objective 5: 9
Supporting Channel Members

3 Types
of
Programs
1. Cooperative

2. Partnership or
strategic alliance

3. Distribution
programming
 9
Cooperative Arrangements

Focuses on channel member needs & problems

Simple & straightforward

Conveys a clear sense of mutual benefit

 Cooperative Arrangements 9

Typical types of cooperative programs

provided by Manufacturers to channel members

• Cooperative advertising allowances

• Payments for interior displays
• Contests for buyers, salespeople, etc.
• Allowances for warehousing functions
• Payments for window display space
• Detail men who check inventory
• Demonstrators
• Coupon-handling allowance
• Free goods
 9
Partnerships & Strategic Alliances

Focus on a continuing and mutually

supportive relationship between the
manufacturer and its channel members in
an effort to provide a more highly motivated
team, network, or alliance of channel members
 9
Partnerships & Strategic Alliances

Three basic phases

1. Manufacturer should make explicit statement of

policies in areas such as product availability,
technical support, pricing, etc.

2. Manufacturer should assess all existing distributors

as to their capabilities for fulfilling their roles

3. Manufacturer should continually appraise the

appropriateness of the policies guiding his
or her relationship with the channel members
 9
Distribution Programming

A comprehensive set of policies for the promotion

of a product through the channel

Developed as a joint effort between the

manufacturer and the channel members
to incorporate the needs of both
 9
Distribution Programming

Steps for developing a program:

1. Manufacturer develops analysis of marketing

objectives & the kinds of levels of support needed
from channel members
• Ascertains channel members’ needs &
problem areas

2. Formulate specific channel policies that offer:

• Price concessions to channel members
• Financial advice
• Some kind of protection for channel members
Objective 6: 9
Relationship Differences

Cooperative Arrangements

Intermittent interactions between manufacturer

& channel members

Partnerships & Strategic Alliances

Continuing & mutually supportive relationship

Distribution Programming

Deals with virtually all aspects of the

channel relationship
Objective 7: 9
The Selective Use of Power

The channel manager

must exercise effective leadership on a
continuing basis to attain a well-motivated
team of members.
 Objective 8: 9
Limited Control
Loosely arranged firms = few advantages from
central direction

Reward & penalty system not precise

Interorganizational System

Overall planning uncoordinated

Diffused perspective necessary to maximize

total system effort
 Chapter 10

Product Issues in
Channel Management